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G20 Urges Action to Counter Rising Costs from Natural Disasters

June 16, 2012

New study shows how active disaster risk management
reduces losses and protects communities

LOS CABOS, MEXICO, June 16, 2012 - The leaders of the world’s largest economies, meeting at the G20 Summit in Los Cabos, Mexico, have highlighted the importance of disaster risk management as an integral part of development policy to reflect their concern about the dramatic increase in losses from natural disasters in both developed and developing countries.  

In 2011, the world witnessed record losses from disasters caused by natural hazards with losses estimated at up to US$380 billion. Recent events have shown that no country―rich or poor―has been immune from crippling natural hazards. Addressing these rising losses is compelling leaders to develop more active approaches to risk management and make better informed decisions to avoid the creation of new risk.

At an event on the sidelines of the G20 Summit, Mexico and the World Bank released a joint report entitled “Improving the Assessment of Disaster Risks to Strengthen Financial Resilience”. The report is a compendium of actions undertaken in G20 and other countries to protect their populations and assets against losses from adverse natural events. It also outlines how the G20, the World Bank, and other international partners can play an increased role in cooperating with national and local authorities on the challenges set out in the report.

"The report ‘Improving the Assessment of Disaster Risks to Strengthen Financial Resilience’ is the first deliverable under the G20 disaster risk management agenda," said Jose Antonio Meade, Finance Minister of Mexico.

It is increasingly clear that the dramatic increase in disaster losses around the world is the result of uncontrolled development. Rapid urbanization and changes in climate patterns will exacerbate this trend. The G20 recognizes that there is an urgent need to integrate risk consideration at all levels of development planning in order to increase the resilience of communities and national economies.

“When natural disasters strike we see the tragedy of human suffering but the less visible effects can be just as devastating to people”, said Robert B. Zoellick, President of the World Bank Group. “The economic impacts of disasters can push people back into poverty and threaten programs for the poor by forcing governments to divert financing. We all need to learn from the experiences of other countries while promoting knowledge exchanges that will help to build resilience in all sectors of an economy.”

The publication released today will help in these efforts. Looking at the need to better understand risks to inform decisions, the publication is a wake-up call to Ministers of Finance as well as a guide for countries to improve decision-making and strengthen their financial resilience.

The report highlights the critical role of information in decision-making. Countries must be able to understand the risks they face. Identifying natural hazards, and understanding their potential impact on people and assets, is a fundamental element of guiding resilient development.

Fifteen of the G20 members as well as invited countries (Argentina, Australia, Brazil, Chile, China, Colombia, France, Germany, Italy, Japan, Republic of Korea, Mexico, Turkey, United Kingdom, and United States), and the OECD, submitted contributions to the publication.

Mexico is at the forefront in addressing disaster risk through the use of innovative financial strategies that support an effective civil protection system and the reconstruction of critical infrastructure. The World Bank Group has worked with the Government of Mexico for many years, supporting a shift from an approach based on post disaster response to one that focuses on ex-ante preparedness. For example, Mexico, with assistance of the World Bank, issued in 2009 the first multi-peril sovereign catastrophe bond. This allowed the government to buy parametric insurance efficiently and to transfer a pool of disaster risks to the capital market, mainly covering earthquakes and tropical storms.

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PRESS RELEASE NO:
2012/503/SDN